Tom Moeller

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&bull; Record decline of 6.7% in leaders reflects widespread effects from coronavirus.


&bull; Coincident indicators signal nascent recession.


&bull; Lagging indicators confirm large downshift in economy.


The Conference Board reported that its Composite Index of Leading Economic
Indicators declined an historic 6.7% (-6.5% y/y) during March following a 0.2%
February decrease, revised
from 0.1%. A 7.0% decline had been expected in the Action
Economics Forecast Survey. The series is comprised of 10 components which tend
to precede changes in the overall economy.
Last month's weakness reflected widespread declines amongst
the component series. The largest negative contribution came from higher initial
unemployment insurance claims which accounted for 5.5 percentage points of the
total's decline. Lower stock prices and building permits also contributed
negatively, as did the length of the average workweek and the ISM new orders
index. Consumer expectations for business/economic conditions fell slightly.
Factory orders for consumer goods &amp; materials, and nondefense capital goods
orders had little effect on the total's change nor did the leading credit index.
The interest rate spread between
10-year Treasuries and Fed funds made a slight positive contribution.
Three-month growth in the leading index weakened to -23.5%
(AR), the slowest since January 2009 when the economy was in the midst of
recession.
The Index of Coincident Economic Indicators declined 0.9%
last month (+0.3 y/y) following an unrevised 0.3% gain during February. A
decline in industrial production had the largest negative effect on the index
followed by reduced payroll employment. Personal income less transfer payments
and
manufacturing &amp; trade sales made slight positive contributions to the index
change.
Three-month growth in the coincident index deteriorated to
-2.2% (AR), its weakest since March 2013.
The Index of Lagging Economic Indicators strengthened 1.2%
(2.6% y/y) in March after a 0.3% February gain, revised from 0.4%. Contributing positively to the index
change were the average duration of unemployment and commercial &amp; industrial
loans outstanding. The prime rate charged by banks and
growth in the services CPI exhibited sharply negative effects. Other series had
little influence on the lagging index change.
Three-month growth in the lagging index surged to 6.0% (AR).
The ratio of coincident-to-lagging economic indicators is
considered another leading indicator of economic activity. It plunged to 96.7,
its lowest level since May 1961 which preceded several years of positive
economic growth.
The Conference Board figures are available in Haver's BCI
database; the components are available there, and most are also in USECON.
The expectations are in the AS1REPNA database. Visit the Conference
Board's <a href="http://www.conference-board.org/">site</a> for coverage of
leading indicator series from around the world.
A Time for Bold Action from John C. Williams,
President &amp; CEO Federal Reserve Bank of New York is available here <a href="https://www.newyorkfed.org/newsevents/speeches/2020/wil200416">https://www.newyorkfed.org/newsevents/speeches/2020/wil200416</a>

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Business Cycle Indicators (%)</th>
 <th scope="col" >Mar</th>
 <th scope="col" >Feb</th>
 <th scope="col" >Jan</th>
 <th scope="col" >&nbsp;Y/Y</th>
 <th scope="col" >2019</th>
 <th scope="col" >2018</th>
 <th scope="col" >2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Leading</td>
 <td>-6.7</td>
 <td>-0.2</td>
 <td>0.4</td>
 <td>-6.5</td>
 <td>1.6</td>
 <td>5.7</td>
 <td>3.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Coincident</td>
 <td>-0.9</td>
 <td>0.3</td>
 <td>0.1</td>
 <td>0.3</td>
 <td>1.8</td>
 <td>2.5</td>
 <td>2.2</td>
 </tr>
 <tr>
 <td class="firstcol" >Lagging</td>
 <td>1.2</td>
 <td>0.3</td>
 <td>-0.1</td>
 <td>2.6</td>
 <td>2.8</td>
 <td>2.5</td>
 <td>2.4</td>
 </tr>
	 </tbody>
	 </table>
	 
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• Record decline of 6.7% in leaders reflects widespread effects from coronavirus. • Coincident indicators signal nascent recession. • Lagging indicators confirm large downshift in economy. The Conference Board reported that its [...]

U.S. Leading Economic Indicators Plunge

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&bull; The housing sector is hard hit by the spread of the coronavirus.


&bull; Falling permits suggest more weakness to come.


New residential home building weakened dramatically last
month and likely will fall further. Housing starts
declined 22.3% (+1.4% y/y) during March to 1.216 million units (SAAR). They fell
3.4% in February to 1.564 million, revised from 1.599 million. Total starts are
24.9% below their January peak. The latest level was the lowest level of starts
since July of last year. The Action Economics Forecast Survey expected 1.320
million starts for March.

Starts of single-family starts
declined 17.5% (+2.8% y/y) to 856,000 last month following a 4.5% February
increase. It was the lowest level of single-family starts since May of last
year. Multi-family starts fell 31.7% (-1.6% y/y) to 360,000 after declining 15.9% in February. It
was the lowest level since February 2019.

A 6.8% decline (+5.0% y/y) in building permits to 1.353
million units followed a 6.3% February drop, suggesting continued weakness in
new home building. Permits to build single-family homes fell 12.0% (+8.7% y/y)
to 884,000, a six-month low. Permits to build multi-family dwellings rose 4.9%
(-1.3% y/y).

By region, last month's weakness in starts was led by a 42.5%
decline (-16.9% y/y) in the Northeast to 69,000. It followed a similar decline
during February. Starts in the West weakened 18.2% (-8.5% y/y) to 301,000 and
added to February's 15.6% decline. In the Midwest, housing starts fell 21.5%
(+15.9% y/y) to 153,000 and more-than-reversed the increase during the prior
month. In the South, starts decreased 21.3% (+5.8% y/y) to 693,000, the lowest
level since October.

The housing starts and permits figures can be found in
Haver's USECON database. The expectations figure is contained in the AS1REPNA database.

The Fed's latest Beige Book covering regional economic
conditions can be found <a href="https://www.federalreserve.gov/monetarypolicy/beigebook202004-summary.htm">here</a>.

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Housing Starts (000s, SAAR)</th>
 <th>Mar</th>
 <th>Feb</th>
 <th>Jan</th>
 <th>Mar Y/Y %</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Total</td>
 <td>1,216</td>
 <td>1,564</td>
 <td>1,619</td>
 <td>1.4</td>
 <td>1,298</td>
 <td>1,250</td>
 <td>1,209</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Single-Family</td>
 <td>856</td>
 <td>1,037</td>
 <td>992</td>
 <td>2.8</td>
 <td>894</td>
 <td>873</td>
 <td>852</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Multi-Family</td>
 <td>360</td>
 <td>527</td>
 <td>627</td>
 <td>-1.6</td>
 <td>404</td>
 <td>377</td>
 <td>357</td>
 </tr>
 <tr class="grey2">
 <td class="firstcol" >Starts By Region</td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Northeast</td>
 <td>69</td>
 <td>120</td>
 <td>217</td>
 <td>-16.9</td>
 <td>116</td>
 <td>111</td>
 <td>111</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Midwest</td>
 <td>153</td>
 <td>195</td>
 <td>173</td>
 <td>15.9</td>
 <td>170</td>
 <td>171</td>
 <td>181</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;South</td>
 <td>693</td>
 <td>881</td>
 <td>793</td>
 <td>5.8</td>
 <td>689</td>
 <td>631</td>
 <td>603</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;West</td>
 <td>301</td>
 <td>368</td>
 <td>436</td>
 <td>-8.5</td>
 <td>323</td>
 <td>337</td>
 <td>314</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Building Permits</td>
 <td>1,353</td>
 <td>1,452</td>
 <td>1,550</td>
 <td>5.0</td>
 <td>1,350</td>
 <td>1,330</td>
 <td>1,286</td>
 </tr>
	 </tbody>
	 
	 
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• The housing sector is hard hit by the spread of the coronavirus. • Falling permits suggest more weakness to come. New residential home building weakened dramatically last month and likely will fall further. Housing starts declined [...]

U.S. Housing Starts & Building Permits Collapse in March

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• The housing sector is hard hit by the spread of the
coronavirus.
• Falling permits suggest more weakness to come.
New residential home building weakened dramatically last
month and likely will fall further. Housing starts
declined 22.3% (+1.4% y/y) during March to 1.216 million units (SAAR). They fell
3.4% in February to 1.564 million, revised from 1.599 million. Total starts are
24.9% below their January peak. The latest level was the lowest level of starts
since July of last year. The Action Economics Forecast Survey expected 1.320
million starts for March. 
Starts of single-family starts
declined 17.5% (+2.8% y/y) to 856,000 last month following a 4.5% February
increase. It was the lowest level of single-family starts since May of last
year. Multi-family starts fell 31.7% (-1.6% y/y) to 360,000 after declining
15.9% in February. It was the lowest level since February 2019.
A 6.8% decline (+5.0% y/y) in building permits to 1.353
million units followed a 6.3% February drop, suggesting continued weakness in
new home building. Permits to build single-family homes fell 12.0% (+8.7% y/y)
to 884,000, a six-month low. Permits to build multi-family dwellings rose 4.9%
(-1.3% y/y).
By region, last month's weakness in starts was led by a 42.5%
decline (-16.9% y/y) in the Northeast to 69,000. It followed a similar decline
during February. Starts in the West weakened 18.2% (-8.5% y/y) to 301,000 and
added to February's 15.6% decline. In the Midwest, housing starts fell 21.5%
(+15.9% y/y) to 153,000 and more-than-reversed the increase during the prior
month. In the South, starts decreased 21.3% (+5.8% y/y) to 693,000, the lowest
level since October.
The housing starts and permits figures can be found in
Haver's USECON database. The expectations figure is contained in the AS1REPNA
 database.
The Fed's latest Beige Book covering regional economic
conditions can be found here <a href="https://www.federalreserve.gov/monetarypolicy/beigebook202004-summary.htm">https://www.federalreserve.gov/monetarypolicy/beigebook202004-summary.htm</a>
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="730">Housing Starts (000s, SAAR)</th>
 <th width="162">Mar</th>
 <th width="162">Feb</th>
 <th width="162">Jan</th>
 <th width="162">Mar Y/Y %</th>
 <th width="163">2019</th>
 <th width="163">2018</th>
 <th width="163">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" width="730">Total</td>
 <td align="center" width="162">1,216</td>
 <td align="center" width="162">1,564</td>
 <td align="center" width="162">1,619</td>
 <td align="center" width="162">1.4</td>
 <td align="center" width="163">1,298</td>
 <td align="center" width="163">1,250</td>
 <td align="center" width="163">1,209</td>
 </tr>
 <tr>
 <td class="firstcol" width="730">&nbsp;&nbsp;Single-Family</td>
 <td align="center" width="162">856</td>
 <td align="center" width="162">1,037</td>
 <td align="center" width="162">992</td>
 <td align="center" width="162">2.8</td>
 <td align="center" width="163">894</td>
 <td align="center" width="163">873</td>
 <td align="center" width="163">852</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="730">&nbsp;&nbsp;Multi-Family</td>
 <td align="center" width="162">360</td>
 <td align="center" width="162">527</td>
 <td align="center" width="162">627</td>
 <td align="center" width="162">-1.6</td>
 <td align="center" width="163">404</td>
 <td align="center" width="163">377</td>
 <td align="center" width="163">357</td>
 </tr>
 <tr class="grey2">
 <td class="firstcol" width="730">Starts By Region</td>
 <td align="center" width="162"></td>
 <td align="center" width="162"></td>
 <td align="center" width="162"></td>
 <td align="center" width="162"></td>
 <td align="center" width="163"></td>
 <td align="center" width="163"></td>
 <td align="center" width="163"></td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="730">&nbsp;&nbsp;Northeast</td>
 <td align="center" width="162">69</td>
 <td align="center" width="162">120</td>
 <td align="center" width="162">217</td>
 <td align="center" width="162">-16.9</td>
 <td align="center" width="163">116</td>
 <td align="center" width="163">111</td>
 <td align="center" width="163">111</td>
 </tr>
 <tr>
 <td class="firstcol" width="730">&nbsp;&nbsp;Midwest</td>
 <td align="center" width="162">153</td>
 <td align="center" width="162">195</td>
 <td align="center" width="162">173</td>
 <td align="center" width="162">15.9</td>
 <td align="center" width="163">170</td>
 <td align="center" width="163">171</td>
 <td align="center" width="163">181</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="730">&nbsp;&nbsp;South</td>
 <td align="center" width="162">693</td>
 <td align="center" width="162">881</td>
 <td align="center" width="162">793</td>
 <td align="center" width="162">5.8</td>
 <td align="center" width="163">689</td>
 <td align="center" width="163">631</td>
 <td align="center" width="163">603</td>
 </tr>
 <tr>
 <td class="firstcol" width="730">&nbsp;&nbsp;West</td>
 <td align="center" width="162">301</td>
 <td align="center" width="162">368</td>
 <td align="center" width="162">436</td>
 <td align="center" width="162">-8.5</td>
 <td align="center" width="163">323</td>
 <td align="center" width="163">337</td>
 <td align="center" width="163">314</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="730">Building Permits</td>
 <td align="center" width="162">1,353</td>
 <td align="center" width="162">1,452</td>
 <td align="center" width="162">1,550</td>
 <td align="center" width="162">5.0</td>
 <td align="center" width="163">1,350</td>
 <td align="center" width="163">1,330</td>
 <td align="center" width="163">1,286</td>
 </tr>
 </tbody>
</table>
&nbsp;
&nbsp;
Philadelphia Fed Manufacturing Index Plunges in April 
by <a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;April 16, 2020
• Business activity weakens broadly.
• Improved expectations reading likely helped by
stimulus plan.
The Federal Reserve Bank of Philadelphia reported that its
General Factory Sector Business Conditions Index declined sharply to -56.6
during April from -12.7 in March. An index of -25.0 had been expected in the
Action Economics Forecast Survey. These figures are diffusion indexes where
readings above zero indicate expansion. The percentage of firms reporting an
improvement in business activity fell sharply to 3.5% this month. The percentage
reporting weaker conditions surged to 60%.
Haver Analytics constructs an ISM-Adjusted General Business
Conditions Index. It dove to 29.7 this month from 57.1 in March. That equaled
the lowest level since March 2009 which was near the end of the last recession.
Over the past twenty years, there has been a 60% correlation between the
ISM-Adjusted Philadelphia Fed Index and q/q real GDP growth.
All but one of the underlying series, which are sampled
separately from the composite index, deteriorated in April. The new orders and
shipments figures posted the most dramatic declines while the order backlog
series and inventories also fell. The delivery times reading improved slightly,
suggesting slower product delivery speeds.
On the labor front, the employment index declined sharply to
the lowest level since March 2009. No respondents reported an increased level of
hiring while a greater 47% reported a decline. During the last twenty years,
there has been a 76% correlation between the jobs index and the m/m change in
factory sector employment. The average workweek measure fell sharply to a record
low.
The index of prices paid also weakened and showed price
deflation for the first time in roughly five years. A lessened nine percent of
respondents paid higher prices while a greatly increased 18% paid less. The
index of prices received similarly showed price deflation.
The Philadelphia Fed also constructs indexes of future
activity. The expected General Business Conditions series improved slightly. The
future shipments, unfilled orders and prices series edged higher but remained at
depressed levels.
The survey panel consists of 150 manufacturing companies in
the third Federal Reserve District (which consists of southeastern Pennsylvania,
southern New Jersey and Delaware). The diffusion indexes represent the
percentage of respondents indicating an increase minus the percentage indicating
a decrease in activity. The ISM-adjusted figure, calculated by Haver Analytics,
is the average of five diffusion indexes: new orders, shipments, employment,
delivery times and inventories with equal weights (20% each). Each ISM-adjusted
index is the sum of the percent responding &quot;higher&quot; and one-half of
the percent responding &quot;no change.&quot;
The figures from the Philadelphia Federal Reserve dating back
to 1968 can be found in Haver's SURVEYS database. The expectation from
the Action Economics Forecast Survey is available in AS1REPNA.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" width="1202">Philadelphia Fed - Manufacturing
 Business Outlook Survey (%, SA)</th>
 <th scope="col" width="95">Apr</th>
 <th scope="col" width="95">Mar</th>
 <th scope="col" width="95">Feb</th>
 <th scope="col" width="95">Apr'19</th>
 <th scope="col" width="95">2019</th>
 <th scope="col" width="95">2018</th>
 <th scope="col" width="95">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="1202">General Factory Sector Business
 Conditions</td>
 <td align="center" width="95">-56.6</td>
 <td align="center" width="95">-12.7</td>
 <td align="center" width="95">36.7</td>
 <td align="center" width="95">11.0</td>
 <td align="center" width="95">9.9</td>
 <td align="center" width="95">20.9</td>
 <td align="center" width="95">27.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1202">ISM-Adjusted Business Conditions</td>
 <td align="center" width="95">29.7</td>
 <td align="center" width="95">47.1</td>
 <td align="center" width="95">58.0</td>
 <td align="center" width="95">54.3</td>
 <td align="center" width="95">55.5</td>
 <td align="center" width="95">57.7</td>
 <td align="center" width="95">57.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="1202">&nbsp;&nbsp;New Orders</td>
 <td align="center" width="95">-70.9</td>
 <td align="center" width="95">-15.5</td>
 <td align="center" width="95">33.6</td>
 <td align="center" width="95">16.0</td>
 <td align="center" width="95">14.1</td>
 <td align="center" width="95">21.0</td>
 <td align="center" width="95">25.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1202">&nbsp;&nbsp;Shipments</td>
 <td align="center" width="95">-74.1</td>
 <td align="center" width="95">0.2</td>
 <td align="center" width="95">25.2</td>
 <td align="center" width="95">18.2</td>
 <td align="center" width="95">16.9</td>
 <td align="center" width="95">22.8</td>
 <td align="center" width="95">26.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="1202">&nbsp;&nbsp;Unfilled Orders</td>
 <td align="center" width="95">-13.5</td>
 <td align="center" width="95">-7.4</td>
 <td align="center" width="95">7.4</td>
 <td align="center" width="95">3.6</td>
 <td align="center" width="95">7.7</td>
 <td align="center" width="95">7.0</td>
 <td align="center" width="95">11.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1202">&nbsp;&nbsp;Delivery Time&nbsp;</td>
 <td align="center" width="95">4.1</td>
 <td align="center" width="95">-9.1</td>
 <td align="center" width="95">2.7</td>
 <td align="center" width="95">-3.7</td>
 <td align="center" width="95">9.4</td>
 <td align="center" width="95">9.5</td>
 <td align="center" width="95">10.6</td>
 </tr>
 <tr>
 <td class="firstcol" width="1202">&nbsp; Inventories</td>
 <td align="center" width="95">-10.2</td>
 <td align="center" width="95">1.7</td>
 <td align="center" width="95">11.8</td>
 <td align="center" width="95">3.5</td>
 <td align="center" width="95">5.1</td>
 <td align="center" width="95">7.2</td>
 <td align="center" width="95">2.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1202">&nbsp;&nbsp;Number of Employees</td>
 <td align="center" width="95">-46.7</td>
 <td align="center" width="95">4.1</td>
 <td align="center" width="95">9.8</td>
 <td align="center" width="95">15.1</td>
 <td align="center" width="95">16.9</td>
 <td align="center" width="95">21.5</td>
 <td align="center" width="95">16.1</td>
 </tr>
 <tr>
 <td class="firstcol" width="1202">&nbsp; Average Workweek</td>
 <td align="center" width="95">-54.5</td>
 <td align="center" width="95">0.5</td>
 <td align="center" width="95">10.3</td>
 <td align="center" width="95">10.7</td>
 <td align="center" width="95">9.8</td>
 <td align="center" width="95">15.9</td>
 <td align="center" width="95">14.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1202">&nbsp; Prices Paid</td>
 <td align="center" width="95">-9.3</td>
 <td align="center" width="95">4.8</td>
 <td align="center" width="95">16.4</td>
 <td align="center" width="95">22.2</td>
 <td align="center" width="95">19.7</td>
 <td align="center" width="95">46.1</td>
 <td align="center" width="95">30.4</td>
 </tr>
 <tr>
 <td class="firstcol" width="1202">Expectations - General Business
 Conditions; Six Months Ahead</td>
 <td align="center" width="95">43.0</td>
 <td align="center" width="95">35.2</td>
 <td align="center" width="95">45.4</td>
 <td align="center" width="95">22.2</td>
 <td align="center" width="95">28.4</td>
 <td align="center" width="95">36.8</td>
 <td align="center" width="95">47.1</td>
 </tr>
 </tbody>
</table>





</html>

Housing starts declined 22.3% (+1.4% y/y) during March to 1.216 million units (SAAR). They fell 3.4% in February to 1.564 million, revised from 1.599 million. Total starts are 24.9% below their January peak. The latest level was the [...]

Sandy Batten

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Total business inventories slipped an expected 0.1% (+1.1%
y/y) during January following an unrevised 0.1% December gain. The anticipated
figure is from the Informa Global Markets survey. Business sales increased 0.6%
(+2.1% y/y).........

The manufacturing and trade data are in Haver's USECON database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	 	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Manufacturing &amp; Trade</th>
 <th>Feb</th>
 <th>Jan</th>
 <th>Dec</th>
 <th>Feb Y/Y</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Business Inventories (% chg)</td>
 <td>-0.1</td>
 <td>0.1</td>
 <td>-0.2</td>
 <td>1.1</td>
 <td>2.1</td>
 <td>5.1</td>
 <td>3.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Retail</td>
 <td>0.0</td>
 <td>-0.1</td>
 <td>-0.9</td>
 <td>0.3</td>
 <td>1.0</td>
 <td>4.5</td>
 <td>2.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp;Retail excl.
 Motor Vehicles</td>
 <td>0.3</td>
 <td>0.0</td>
 <td>-0.3</td>
 <td>1.7</td>
 <td>1.9</td>
 <td>1.8</td>
 <td>2.0</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Merchant Wholesalers</td>
 <td>-0.4</td>
 <td>-0.3</td>
 <td>0.1</td>
 <td>0.4</td>
 <td>2.0</td>
 <td>7.3</td>
 <td>3.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Manufacturing</td>
 <td>-0.1</td>
 <td>0.4</td>
 <td>0.3</td>
 <td>2.5</td>
 <td>3.1</td>
 <td>3.5</td>
 <td>4.5</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="8" >Business Sales (% chg)</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Total</td>
 <td>0.6</td>
 <td>0.1</td>
 <td>0.5</td>
 <td>2.1</td>
 <td>1.5</td>
 <td>6.1</td>
 <td>5.4</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Retail</td>
 <td>0.6</td>
 <td>-0.1</td>
 <td>0.3</td>
 <td>4.7</td>
 <td>3.4</td>
 <td>4.6</td>
 <td>4.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp;Retail excl.
 Motor Vehicle</td>
 <td>0.5</td>
 <td>0.4</td>
 <td>-0.1</td>
 <td>4.1</td>
 <td>3.2</td>
 <td>5.3</td>
 <td>4.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Merchant Wholesalers</td>
 <td>1.6</td>
 <td>-0.2</td>
 <td>0.9</td>
 <td>2.2</td>
 <td>0.7</td>
 <td>6.7</td>
 <td>6.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Manufacturing</td>
 <td>-0.5</td>
 <td>0.5</td>
 <td>0.3</td>
 <td>-0.4</td>
 <td>0.7</td>
 <td>6.9</td>
 <td>5.0</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="8" >I/S Ratio</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Total</td>
 <td>1.38</td>
 <td>1.39</td>
 <td>1.39</td>
 <td>1.40</td>
 <td>1.40</td>
 <td>1.36</td>
 <td>1.38</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Retail</td>
 <td>1.42</td>
 <td>1.43</td>
 <td>1.43</td>
 <td>1.48</td>
 <td>1.45</td>
 <td>1.45</td>
 <td>1.47</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp;Retail excl.
 Motor Vehicles</td>
 <td>1.18</td>
 <td>1.18</td>
 <td>1.19</td>
 <td>1.21</td>
 <td>1.19</td>
 <td>1.20</td>
 <td>1.24</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Merchant Wholesalers</td>
 <td>1.33</td>
 <td>1.36</td>
 <td>1.36</td>
 <td>1.35</td>
 <td>1.35</td>
 <td>1.29</td>
 <td>1.30</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Manufacturing</td>
 <td>1.40</td>
 <td>1.40</td>
 <td>1.40</td>
 <td>1.36</td>
 <td>1.38</td>
 <td>1.35</td>
 <td>1.37</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

Total business inventories slipped an expected 0.1% (+1.1% y/y) during January following an unrevised 0.1% December gain. The anticipated figure is from the Informa Global Markets survey. Business sales increased 0.6% (+2.1% [...]

U.S. Business Inventories and Sales Decline in February

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The Empire State Manufacturing Index of General Business Conditions collapsed to -78.2 in April from -21.5 in March. The April reading was the lowest on record, by far surpassing the previous low of -34.3 reached during the Great Recession in 2009. The Action Economics Forecast panel had expected a fall to -30. A record 85.2% of respondents reported weaker business conditions in April while only 7.0% report stronger conditions. This is a diffusion index, which measures how widely dispersed a change is across an area. With nonessential businesses in the New York area having been closed in late March, it is not surprising that a wide swath of respondents reported that conditions had weakened.

The ISM-Adjusted Index, constructed by Haver Analytics, also deteriorated markedly in April, to 31.2 from 49.5 in March. This was again a record low, but only slightly below the previous record low of 35.2 reached during the Great Recession.

As would be expected given the collapse in the headline figure, the subindexes also posted substantial declines in April with new orders and shipments each falling to a record low. New orders plummeted to -66.3 in April from -9.3 in March. Shipments plunged to -68.1 in April from -1.7 in March. These calamitous drops greatly surpassed the previous record lows which were both reached during the Great Recession: -43.8 for new orders and -25.2 for shipments. The delivery time index actually rose in April, signaling longer delivery times. This would normally indicate a growing economy in which demand is stretching supply. However, in the current environment, it likely indicates that supply chains have been severely disrupted by the business closures that have been dictated by the coronavirus

Employment indicators also declined to record lows in April. The number of employees index plunged to -55.3 from -1.5 in March while the average workweek index plummeted to -61.6 in April from -10.6.

The prices paid index only eased to 5.8 from 24.5 while the prices received index fell more markedly to -8.4 from 10.1.

The behavior of the Expected General Business Conditions index indicated that on average the respondents thought the recent hit to business conditions would not linger very long. The expected conditions index rose to 7.0 in April from 1.2 in March. However, there was little consensus on what business conditions would look like in six months. Of the respondents, 48.6% thought conditions in six months would be improved while 41.6% thought they would be weaker.

The Empire State figures are diffusion indexes, which are calculated by subtracting the percentage
of respondents reporting declines from the percentage reporting gains. Their values range from -100 to
+100. The data are available in Haver's SURVEYS database. The ISM-adjusted headline index dates back to
2001. The Action Economics Forecasts can be found in Haver's AS1REPNA database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Empire State Manufacturing
 Survey</th>
 <th scope="col" >Apr</th>
 <th scope="col" >Mar</th>
 <th scope="col" >Feb</th>
 <th scope="col" >Apr'19</th>
 <th scope="col" >2019</th>
 <th scope="col" >2018</th>
 <th scope="col" >2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >General Business Conditions (Diffusion
 Index, %, SA)</td>
 <td>-21.5</td>
 <td>12.9</td>
 <td>4.8</td>
 <td>5.1</td>
 <td>4.8</td>
 <td>19.7</td>
 <td>16.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >General Business Conditions Index (ISM
 Adjusted, &gt;50=Increasing Activity, SA)</td>
 <td>49.5</td>
 <td>56.9</td>
 <td>52.1</td>
 <td>52.8</td>
 <td>51.8</td>
 <td>56.4</td>
 <td>54.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; New Orders</td>
 <td>-9.3</td>
 <td>22.1</td>
 <td>6.6</td>
 <td>3.6</td>
 <td>3.3</td>
 <td>16.4</td>
 <td>14.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Shipments</td>
 <td>-1.7</td>
 <td>18.9</td>
 <td>8.6</td>
 <td>9.7</td>
 <td>10.5</td>
 <td>20.3</td>
 <td>15.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Unfilled Orders</td>
 <td>1.4</td>
 <td>4.5</td>
 <td>-2.7</td>
 <td>2.2</td>
 <td>-6.0</td>
 <td>3.5</td>
 <td>1.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Delivery Time</td>
 <td>2.2</td>
 <td>8.3</td>
 <td>-2.7</td>
 <td>1.4</td>
 <td>-0.1</td>
 <td>9.1</td>
 <td>6.1</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Inventories</td>
 <td>5.8</td>
 <td>12.9</td>
 <td>-0.7</td>
 <td>0.0</td>
 <td>-0.9</td>
 <td>5.9</td>
 <td>1.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Number of Employees</td>
 <td>-1.5</td>
 <td>6.6</td>
 <td>9.0</td>
 <td>13.7</td>
 <td>5.4</td>
 <td>12.3</td>
 <td>8.0</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Average Employee Workweek</td>
 <td>-10.6</td>
 <td>-1.0</td>
 <td>1.3</td>
 <td>-1.8</td>
 <td>2.3</td>
 <td>7.8</td>
 <td>4.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Prices Paid</td>
 <td>24.5</td>
 <td>25.0</td>
 <td>31.5</td>
 <td>34.1</td>
 <td>26.3</td>
 <td>45.8</td>
 <td>29.0</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; Prices Received</td>
 <td>10.1</td>
 <td>16.7</td>
 <td>14.4</td>
 <td>18.1</td>
 <td>10.3</td>
 <td>19.3</td>
 <td>11.0</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Expectations 6 Months Ahead</td>
 <td>1.2</td>
 <td>22.9</td>
 <td>23.6</td>
 <td>27.9</td>
 <td>23.9</td>
 <td>35.2</td>
 <td>42.6</td>
 </tr>
 </tbody>
 </table>
 
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The Empire State Manufacturing Index of General Business Conditions collapsed to -78.2 in April from -21.5 in March. The April reading was the lowest on record, by far surpassing the previous low of -34.3 reached during the Great [...]

Coronavirus Closings Plunge Empire State Manufacturing Index to Record Low

Gerald D. Cohen

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&bull;


&bull;


&bull;


PREVIOUS>>>Industrial production grew 0.6% in February (unchanged year-on-year)
following a downwardly-revised 0.5% decline January...





Industrial production and capacity data and US Population-Weighted Heating and Cooling Days are included in Haver's USECON database.
Additional detail on production and capacity can be found in the IP database. The expectations figures come from the AS1REPNA database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Industrial Production (SA, %
 Change)</th>
 <th>Mar</th>
 <th>Feb</th>
 <th>Jan</th>
 <th>Mar Y/Y</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Total Output</td>
<td >-5.4</td>
<td >0.5</td>
<td >-0.5</td>
<td >-5.5</td>
<td >0.9</td>
<td >3.9</td>
<td >2.3</td>
 </tr>
 <tr>
 <td class="firstcol" >Manufacturing</td>
<td >-6.3</td>
<td >-0.1</td>
<td >-0.1</td>
<td >-6.6</td>
<td >-0.2</td>
<td >2.3</td>
<td >2.0</td>
</tr>
<tr class="odd">
<td class="firstcol" >&nbsp;&nbsp; Durable Goods</td>
<td >-9.1</td>
<td >0.2</td>
<td >-0.7</td>
<td >-9.6</td>
<td >0.7</td>
<td >3.4</td>
<td >2.2</td>
</tr>
<tr>
<td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp; Motor Vehicles</td>
<td >-28.0</td>
<td >3.2</td>
<td >1.4</td>
<td >-26.5</td>
<td >-2.4</td>
<td >4.1</td>
<td >0.0</td>
</tr>
<tr class="odd">
<td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp; Selected High Tech</td>
<td >-0.1</td>
<td >-1.0</td>
<td >1.5</td>
<td >5.5</td>
<td >5.1</td>
<td >6.4</td>
<td >2.6</td>
</tr>
<tr>
<td class="firstcol" >&nbsp;&nbsp; Nondurable Goods</td>
<td >-3.2</td>
<td >-0.3</td>
<td >0.4</td>
<td >-3.1</td>
<td >-0.7</td>
<td >1.9</td>
<td >1.9</td>
</tr>
<tr class="odd">
<td class="firstcol" >Utilities</td>
<td >-3.9</td>
<td >7.0</td>
<td >-4.7</td>
<td >-5.1</td>
<td >-0.8</td>
<td >4.4</td>
<td >-0.8</td>
</tr>
<tr>
<td class="firstcol" >Mining</td>
<td >-2.0</td>
<td >-1.3</td>
<td >0.6</td>
<td >0.0</td>
<td >7.1</td>
<td >12.4</td>
<td >7.4</td>
</tr>
<tr class="odd">
<td class="firstcol" >Capacity Utilization (%)</td>
<td >72.7</td>
<td >77.0</td>
<td >76.7</td>
<td >78.4</td>
<td >77.8</td>
<td >78.7</td>
<td >76.5</td>
</tr>
<tr>
<td class="firstcol" >&nbsp;&nbsp; Manufacturing</td>
<td >70.3</td>
<td >75.0</td>
<td >75.1</td>
<td >76.2</td>
<td >75.6</td>
<td >76.6</td>
<td >75.1</td>
 </tr>
 </tbody>
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• • • PREVIOUS>>>Industrial production grew 0.6% in February (unchanged year-on-year) following a downwardly-revised 0.5% decline January... Industrial production and capacity data and US Population-Weighted Heating and Cooling Days [...]

Robert Brusca

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French retail sales fall 24% 
Record fall in Aussie consumer confidence 
Canada's GDP falls 9% in March 
U.S. data plunge: retail sales -8.7%, Empire State index -78.2, IP -5.4% 
The global rout is on! Tally… HALT! 

I can write about weakness anywhere, but it is all collateral damage to the coronavirus. The main topic is the virus and what it has done or what has been done in trying to deal with it. The manifestation of the analysis is the particular report du jour. France's retail sales survey by the Bank of France shows such a deep and sudden decline that it dwarfs any other move on the chart this month. Everything else is suppressed to allow the graphic to get down to the depths of the current survey reading. We saw this in an earlier graph with release of the China PMI and we are going to see a lot more charts that look indistinguishable from the one above. The scale will be different, the heading will be different, the past history may be different, but it will all look much the same… a time series of data sort ploughing along in pace then the bottom falls out. KABOOM!


KABOOM!

I wish I had something clever or really insightful to say about this, but the result is simply too shocking and distressing to absorb. I'm afraid that the numbers speak for themselves as well as anything that could be said.

France like other nations has mitigation programs in gear. But mitigation can never fill all the cracks. In Germany, for example, a zoo has seen its revenues plunge and it is desperate. It has said it may need to resort to feeding the animals to each other to survive
<a href="https://www.bbc.com/news/world-europe-52283658">(Source here)</a>.

<img border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200415.png" width="660" height="280">


There is no context for the kind of weakness or policy actions or for the needs that are going to be experienced. Opinions on 'what to do' are flashing across the board ranging from wanting government and central banks to do even more to those who want companies that did not build 'rainy day funds' to be allowed to fail. (So much for maximizing shareholder value and putting very penny to work...)

The economics, the morals and ethics and health care approaches all clash in an ugly display of disunity and accusations. Donald Trump has ordered the U.S. to stop funding WHO because of this terrible performance and advice in the crisis and also because of its relationship to China. For this, he is having scorn heaped upon him from virtually all quarters including from China and Russia.

As ire builds toward Trump, it should be remembered that funding WHO is a burden that the U.S. has carried for some time. China, with an economy close in size to the U.S., contributes about 10% of what the U.S. does. The German finance minister claims it is one of the best values for the money. If that is true, why isn't Germany and others putting in more? When Russia calls the U.S. action an act of 'selfishness' that really gets your attention doesn't it? I guess it must be, because who would know better? And China asks for the U.S. to step up to its responsibility! That is a good one too. Has China been responsible by any definition? I am not defending what Trump did at all. This is the worst possible time for this to happen, but it is impossible to not point out the hypocrisy among the critics. China after all manipulated WHO and continues to hold back information about the virus it incubated and released on the world.

In the wake of this virus, the world has never looked smaller. The Trump message of 'America First' never looked timelier! The globalists are on the run. Who knows where the aftermath of this crisis will take us. Let me offer one observation here...not about France or about retail sales or even narrowly about economics. But about failure, policy failure.

Pandem-onomics 
Few of us have thought about pandemics. Asia has had several bouts with them and in each case they were stoppered before becoming issues in the U.S. So it is not surprising that the U.S. authorities became desensitized to the risks. It is hard in any event to be fully prepared for an emergency the likes of this one, year-in and year-out. However, Trump gets the criticism. Had this thing struck four years earlier, I doubt we would see much difference with Mr. Obama as President. The messaging would be clearer and the speeches would be better, but the actions are what they are… They are on the CDC plan. There is only so much a president can do. And on this Trump has not distinguished himself by saying all the right things at the right times. And in this he is not alone – not by any stretch of the imagination. The IMF did not see this coming or as being this bad. The U.K. did not either. Italy was decimated and China misled us all. Trump did close the US borders quickly and did so against the advice of the CDC in America… and here I am perplexed. As a virus non-expert, I was stunned that the THE PLAN (Plan A, Plan B and Plan C) was to lockdown the economy. I watched China do it and thought, well, they can do that in a totalitarian economy but what will WE DO? The disease was reported to kill 1.3% or so of the population mostly the old and or people with debilitating conditions. That's a lot, but 1% is still a low percentage. So I was surprised when a lockdown of everyone was ordered in the U.S. It seemed disproportional to me- and it still does. We did not try to shelter the most at-risk. Instead, from the start, we tried to immobilize 'Social Distancing' everyone. Why? Moreover, why if you were an epidemiologist KNOWING that PLAN A, B and C were/was so draconian would you not advise the President to shut all borders immediately and quarantine any incoming from abroad? Why did CDC encourage him to keep the borders open? Does that make any sense to anyone?

Why was there no Plan A to create a buffer? No country did this. Some EU nations violated Schengen for a while and for good reason. Florida and another state tried to turn back incoming New Yorkers at the border as well!

Trust science...really? 
Rather than blaming politicians for a bad response I want to blame the scientists. This is their plan including when and how to trigger it. If they did not think it through, it is their fault. People say trust science. Well what did it do? In the U.S., science was wrong. It did not want to test broadly, fearing it might cause panic. It would not use the test kits it might have gotten from others. It developed its own tests and stumbled putting the U.S. behind the curve. And Trump haters blame Trump for these missteps, but these are the missteps of science. Now we need to use more scientists (more disciplines) to see what is the best path ahead because when the economy is shut down all sorts of adverse things are set in train as the German zoo has discovered.

Collateral damage 
Far from all being Keynesians now, we are all collateral damage. And despite that as we see in the U.K. and in the U.S., there is still politics. South Korea conducted an election in the middle of all this. The State of Wisconsin in the U.S. had a primary. Boris Johnson, barely out of intensive care, is being criticized for acting too late by the Labor party leader. Donald Trump is being criticized by Democrats and blamed for something he has little impact on by design and circumstance.

My apologies to the epidemiologists for this analysis but I stick by it: To me, the worst prepared for this were the epidemiologists who apparently have never thought through what it means to have a lockdown. They appear to not have consulted anyone in any other science to see what others think of the viability of such a plan or even how to implement it. Not only was global preparedness caught out, the global plan to deal with such a thing was half thought-out by a group that gave no consideration to the collateral damage of their own solution. Containment never had a chance.

Some day we will look this in the eye and assess blame. For now, everyone calls the epidemiologists our leaders (Trust Science!) and heroes. I see them much less in that light. The medical professions and low-wage heath care workers and essential grocery and transit workers are bearing the brunt of this policy. When does protecting the old and infirmed at the cost of life and livelihood of the young and healthy stop making sense? Isn't there a better way to protect those who are at risk than shutting down everything? (Yes, there is!) These are ethical questions that may be very uncomfortable, but that soon will have to be addressed.

A 24% drop in French retail sales is the least of our problems, with all due respect to France- Viva La France.


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French retail sales fall 24% Record fall in Aussie consumer confidence Canada's GDP falls 9% in March U.S. data plunge: retail sales -8.7%, Empire State index -78.2, IP -5.4% The global rout is on! Tally… HALT! I can write about [...]

KABOOM! The Lockdown Strikes

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	 <a href="/comment/200415w.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200415w.png"></a>

&bull; Weakness in housing market is stark.


&bull; Few people across regions are looking to buy.


The Composite Housing Market Index from the National
Association of Home Builders-Wells Fargo plummeted 58.3% (-52.4% y/y) to 30 in
April from 72 in March. It was the lowest level since June 2012. A reading of 55
had been expected in the INFORMA Global Markets survey. The NAHB figures are
seasonally adjusted. Over the past 15 years, there has been a 70% correlation
between the y/y change in the home builders index and the y/y change in new plus
existing home sales.

The index of present sales conditions declined 54.4% m/m to
36 (-47.8% y/y). The index of expected conditions in the next six months fell 52.0%
m/m to 36 (-49.3% y/y). The index measuring traffic of prospective buyers
collapsed by roughly three quarters both m/m and y/y to 13.

Regional readings were all weak. The index for the Northeast
fell 70.3% to 19 (-65.5% y/y) and the index for the Midwest weakened 62.7% to 25
(-55.2% y/y). The index for the West declined 59.5% (-54.9% y/y). The index for
the South declined 55.3% to 34 (-48.5% y/y).

The NAHB has compiled the Housing Market Index since 1985. It
reflects survey questions which ask builders to rate sales and sales
expectations as &quot;good,&quot; &quot;fair&quot; or &quot;poor&quot; and
traffic as &quot;very high,&quot; &quot;average&quot; or &quot;very low.&quot;
The figures are diffusion indexes with values over 50 indicating a predominance
of &quot;good&quot;/&quot;very high&quot; readings. In constructing the
composite index, the weights assigned to the individual index components are:
0.5920 for single-family detached sales, present time, 0.1358 for single-family
detached sales, next six months, and 0.2722 for traffic of prospective buyers.
These data are included in Haver's SURVEYS database.

<a href="/comment/200415x.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200415x.png"></a>
 <a href="/comment/200415y.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200415y.png"></a>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >National Association of Home
 Builders</th>
 <th scope="col" >Apr</th>
 <th scope="col" >Mar</th>
 <th scope="col" >Feb</th>
 <th scope="col" >Apr Y/Y</th>
 <th scope="col" >2019</th>
 <th scope="col" >2018</th>
 <th scope="col" >2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Composite Housing Market Index, SA (All
 Good=100)</td>
 <td>30</td>
 <td>72</td>
 <td>74</td>
 <td>-52.4%</td>
 <td>66</td>
 <td>67</td>
 <td>68</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Single-Family Sales: Present</td>
 <td>36</td>
 <td>79</td>
 <td>81</td>
 <td>-47.8%</td>
 <td>72</td>
 <td>73</td>
 <td>74</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Single-Family Sales: Next Six
 Months</td>
 <td>36</td>
 <td>75</td>
 <td>79</td>
 <td>-49.3%</td>
 <td>72</td>
 <td>74</td>
 <td>76</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Traffic of Prospective Buyers</td>
 <td>13</td>
 <td>56</td>
 <td>57</td>
 <td>-72.3%</td>
 <td>49</td>
 <td>50</td>
 <td>50</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

• Weakness in housing market is stark. • Few people across regions are looking to buy. The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo plummeted 58.3% (-52.4% y/y) to 30 in April from 72 [...]

U.S. Home Builder Sentiment Collapses

Inflationary impact of surge in oil prices larger in Europe than in the US

Futures market thinks the price of oil will recede significantly over the next six months

Recent pickup in US defense orders could help support overall growth ahead

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

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Michael J. Moran

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The Conference Board’s index of Consumer Confidence inched higher in April from an upwardly revised reading in March. The combined changes left the measure 1.1% higher than the preliminary tally in March. Despite the improvement, the index remained in the low end of the range for the current expansion. The index in April totaled 92.8, down from an average of 96.1 in 2025 and an annual cyclical high of 105.4 in 2023.

The Improvement in April reflected a pickup in the expectations component, which rose 1.7%. The current conditions component inched 0.2% lower. Overall views on current conditions slipped despite more favorable assessments of the labor market. The so-called measure of the jobs gap (share of respondents indicating that jobs are plentiful less the share saying that jobs are hard to get) rose 1.4 percentage points higher to 7.5%. The pickup reflected a drop in the share indicating that jobs are hard to get (down 1.5 percentage points to 19.8%). The share indicating that jobs are plentiful eased 0.1 percentage point to 27.3%.

Although expectations improved in April, from a long-term perspective they could be viewed as the more important factor restraining the headline measure of confidence. As shown in the left chart below, the expectations component of confidence shows considerably less volatility than the current conditions component does. The contrasting patterns suggest that individuals realize that the economy will undergo possibly sharp cyclical swings, but they expect conditions at some point to return to an underlying norm.

The current conditions index in the current cycle has indeed dropped noticeably, but it is still above the long run average (123.8 in April versus the average of approximately 108 from 1990 to 2025). The expectations component, as usual, has eased less than the current conditions component, but its shift has pushed the measure to the low end of its long-run range (72.2 in April versus an average of approximately 88).

Interestingly, concern about the labor market seems to be a factor affecting expectations. While current views on the labor market are favorable (plentiful less hard to get jobs gap of 7.5%), Individual are concerned about the future. The survey asks respondents if they expect more jobs or fewer jobs six months hence. The share indicating fewer jobs has moved well into the upper end of the historical range. Such observations in the past were typically seen only during recession (chart, below right). An unfavorable view on interest rates also seems to be playing a role in depressing the expectations component. More than 60% of respondents to the current survey expect higher interest rates 12 months from now.

The results from the Conference Board survey of consumers differ markedly from those of the University of Michigan Survey Research Center. The Michigan results show consumer sentiment at a record low, while the Conference Board index is only slightly below its long-run average. The difference most likely reflects the nature of the questions in the surveys. The Conference Board focuses on business and employment conditions, while Michigan emphasizes personal finances. The focus on finances, along with questions on inflation, probably picks up concerns about affordability.

The Consumer Confidence data are available in Haver’s **CBDB** database. The total indexes, which are indexed to 1985=100, appear in **USECON**, and market expectations are in **AS1REPNA**.

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- Expectations improved slightly in April, but are still subdued relative to norms.
- Moderately favorable view of current conditions.

Consumer Confidence: Modest Change in April

Winnie Tapasanun

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U.S. house prices were essentially unchanged m/m in February after rises of 0.2% in January (+0.1% initially) and 0.3% in December (unrevised), according to the Federal Housing Finance Agency (FHFA) House Price Index. February marked the first flat reading since September following four consecutive m/m increases. The HPI was at 441.43 in February, up 14.8% from its August 2022 low of 384.59. The year-on-year growth rate eased to 1.7% in February—the lowest since March 2012—from 1.8% in January (+4.1% in February 2025), down from a high of 6.9% in February 2024 and well below a peak of 18.5% in February 2022.

By region, February FHFA house prices showed a mixed performance. House prices fell m/m in February (vs. January) in four of the nine census divisions. Declines were led by Mountain (-1.1% vs. +0.4%), followed by Pacific (-0.5% vs. +0.6%), West North Central (-0.4% vs. +0.3%), and Middle Atlantic (-0.1% vs. +0.3%). To the upside, house prices rose m/m in four census divisions in February (vs. January): South Atlantic (+0.6% vs. -0.2%), East South Central (+0.2% vs. +1.2%), New England (+0.2% vs. +0.6%), and West South Central (+0.2% vs. -0.3%). Meanwhile, house prices in East North Central were virtually unchanged m/m for the second successive month in February following seven straight m/m gains.

Year-on-year house prices continued to rise in February in most regions, except Mountain, Pacific, and West South Central. The y/y growth rate accelerated in February (vs. January) in only two of the nine census divisions: East South Central (+4.0% vs. +3.2%) and South Atlantic (+0.9% vs. +0.4%). Meanwhile, house price growth decelerated y/y in February (vs. January) in four regions: New England (+3.1% vs. +3.9%), West North Central (+3.1% vs. +3.6%), East North Central (+3.8% vs. +4.5%), and Middle Atlantic (+4.2% vs. +4.5%). To the downside, Mountain (-0.7% vs. 0.0%), Pacific (-0.4% vs. -0.3%), and West South Central (-0.1% vs. -0.4%) posted y/y declines in February.

The FHFA house price index is a weighted purchase-only index that measures average price changes in repeat sales of the same property. An associated quarterly index includes refinancing the same kind of properties. The indexes are based on transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only mortgage transactions on single-family properties are included.

The FHFA data are available in Haver’s **USECON** database.

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- February FHFA HPI 0.0% m/m; +1.7% y/y, lowest since Mar. ’12.
- House prices down m/m in four of nine census divisions, led by Mountain (-1.1%); up in four, driven by South Atlantic (+0.6%); flat in East North Central.
- House prices up y/y in six of nine regions, led by Middle Atlantic (+4.2%), but down in Mountain (-0.7%), Pacific (-0.4%), and West South Central (-0.1%).

U.S. FHFA House Prices Flat in February After Four Straight M/M Gains

Tian Yong Woon

In this week’s Letter, we cover the latest developments and implications of the Middle East conflict for Asia, while also making space for other important themes, including artificial intelligence (AI). The Middle East conflict remains in a no deal state coming out of the weekend, though some early Monday optimism emerged in Asian markets following Iran’s reported offer to reopen the Strait of Hormuz (chart 1). Nonetheless, as the Strait closure drags on, so too do the fiscal costs of domestic fossil fuel subsidies across Asia, which have been shown to move closely with crude oil prices (chart 2). While such measures offer direct relief by cushioning household energy costs, they remain difficult to sustain over the long haul.

Over the week, we also saw a further fraying in regional monetary policy trends, with the Philippines hiking its policy rate for the first time in about two years amid inflation concerns, while Indonesia stood pat on rates (chart 3). Investor attention is likely to remain fixed on monetary policy this week, with the Bank of Japan due to decide on policy. Expectations for an April hike have faded amid the persistent Middle East conflict, though yen weakness continues to present a source of concern (chart 4). The week also brings China’s latest PMI readings (chart 5), adding to the recent run of hard data accompanying the Q1 GDP release.

Beyond the Middle East conflict, the evolution of AI continues to demand close attention. Before geopolitical tensions took centre stage, AI was the dominant market narrative — and that enthusiasm has hardly faded. If anything, recent developments suggest the story is broadening: use cases are expanding, scalability is improving, and access is widening beyond large corporates to the mass market — increasingly spilling into the realm of physical AI. It may well be this persistent wave of optimism that is helping to underpin equity valuations, even as the geopolitical backdrop darkens (chart 6).

**The Middle East conflict**
About two months in, we remain stuck in the limbo of the US-Iran conflict, which has left the Strait of Hormuz largely closed and much of the world starved of the critical oil flows needed to power the global economy. The back and forth between the US and Iran has persisted in recent weeks, with both sides again failing to reach a peace deal over the weekend, though Monday’s news of Iran offering to reopen the Strait has revived some hope in markets. In truth, commodity and market valuations do not hinge so much on a peace deal itself, but rather on the resumption of oil flows through the Strait, something that could materialise even in the absence of a formal deal, though any agreement that includes and credibly delivers such a reopening would likely be warmly received by markets. Until then, market gyrations are likely to persist, with prices fluctuating in response to each new snippet of news. And until then, the world will continue both to be starved of, while gradually adapting to, the drip feed of oil flows emerging from the Strait.

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**The fiscal costs of the Middle East conflict**
As the Middle East conflict drags on, so too does the strain on fiscal resources across parts of Asia, as the costs of energy-related subsidy programmes continue to mount. While such programmes have an immediate, direct, and tangible impact in shielding households from surging energy costs, they are far from sustainable, particularly if oil prices remain well above targeted levels or stay elevated for an extended period. As chart 2 illustrates, the costs of these explicit subsidy programmes tend to rise closely with crude oil prices, as seen in India and Indonesia. Other measures adopted elsewhere, such as drawing down oil reserves, may be less fiscally costly, but are similarly difficult to sustain indefinitely. In both respects, the clock is ticking, and the world continues to hold its breath as the conflict drags on.

260427T2.jpg

**The latest central bank responses to the conflict**
Over the past week, Asia saw two central bank decisions. The Philippines’ (BSP) opted to deliver its first rate hike in about two years, while Indonesia’s (BI) chose to stand pat on policy rates and instead committed to stepped up FX intervention (chart 3). This latest round of decisions points to a further fraying of what had been a broad regional monetary policy consensus, namely that central banks would delay additional easing while maintaining a high bar for outright tightening. Domestic considerations, however, remain paramount. In the Philippines’ case, the central bank has moved to rein in inflation, which is already showing notable signs of price pass through stemming from disruptions linked to the Strait of Hormuz. That said, BSP is not the first in the region to buck the reluctance to tighten. Singapore’s central bank had already tightened policy in mid-April, albeit through its own distinct framework, given its use of the exchange rate rather than policy rates as the primary channel for monetary policy.

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**The week ahead**
Looking to the week ahead, a major central bank decision looms in Japan. Market expectations for the Bank of Japan to deliver a rate hike at its April meeting have ebbed amid the persistence of the Middle East conflict, to which Japan remains particularly vulnerable given its reliance on oil imports flowing through the Strait of Hormuz. At the same time, inflation in Japan has yet to become a major concern, with recent readings having picked up but not yet entering troubling territory. One potential source of concern, however, lies with the Japanese yen, which has remained on a weakening trend since early last year (chart 4). That depreciation has been one of the key arguments underpinning calls for further rate hikes.

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The week also brings China’s latest PMIs into focus. March saw a divergence between China’s official PMI readings, which improved, and the unofficial readings from RatingDog, which instead pulled back. Nonetheless, both official and unofficial gauges remained in expansionary territory (chart 5), with investors now watching closely to see whether that resilience can be sustained amid ongoing stresses from the Middle East, or whether offsetting drivers can continue to keep Chinese business sentiment and prospects buoyant.

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**Beyond the strait**
Moving beyond the Middle East conflict, a whole host of developments continue to unfold globally, many of which have in fact helped offset some of the pessimism wrought by the Strait’s chokehold. One such development is artificial intelligence (AI), which had dominated headlines before the outbreak of the conflict and continues to advance at breakneck pace. AI capabilities are still rapidly evolving, while practical applications, such as physical AI embodied in humanoid robots, are beginning to show broader and stronger use cases. Production of such robots is also becoming increasingly scalable and within reach not just for industrial complexes and healthcare, but for the mass market as well. It is perhaps growing optimism around these prospects that has helped keep equity valuations buoyant, even in the face of the festering conflict in the Middle East. Moreover, while concerns over AI-driven job displacement persist, new opportunities are emerging as well, particularly for AI adopters, with a growing share of job postings in Western economies increasingly referencing AI-related skills, as shown in chart 6.

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Asia

Economic Letter from Asia: Not Just About the Strait

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**The Distributive Trades Survey**

The U.K. Distributive Trades Survey for April 2026 and the look-ahead expectation readings for May paint an extremely soured outlook for the U.K. economy.

**Retail ranking**: Surveys for retail sales compared to a year ago, orders compared to a year ago, and sales evaluated for the time of year all have rankings near zero, which is the worst result on this timeline. This zero distinction applies to retail sales compared to a year ago. The best ranking is 11.6%; that is for sales evaluated for the time of year. Orders compared to a year ago have a 4.2 percentile standing. The stock-to-sales ratio—which is a completely different concept—shows that the inventory-to-sales ratio has a 29.9 percentile standing.

**Retail diffusion**: The raw April diffusion readings (up minus down diffusion) show that sales compared to a year ago slipped to a reading of -68 in April from -52 in March. Orders fell to -46 in April from -26 in March. Sales evaluated for the time of year fell to -32 April from -23 in March. All three measures weakened, and all three weakened decisively, resulting in extremely weak rankings. All of the rankings are executed on data back to 2002.

**Expectations for retailing**: The expectations readings for May show slippage again across all three metrics: expected sales compared to a year ago, expected orders compared to a year ago, and expected sales for the time of year. Expected sales compared to a year ago fell to -60 in May from -49 in April. Orders compared to a year ago declined to -45 in May from -30 in April, and sales for the time of year slipped to -43 from -19. In May, these readings have rankings in a 0.4 percentile standing for sales compared to a year ago, a 1.8 percentile standing for sales evaluated relative to the time of year, and a 4.6 percentile standing for orders compared to a year ago. These two panels on current and expected retail sales volumes are just simply terrible: weak monthly, weak in ranking terms, and showing slipping momentum.

The distributor trade series also provides data on the wholesale sector. While the wholesale sector is not quite as beat up as the retail sector, it's still extremely weak. There is no cause for any kind of hope that things are getting better based on wholesaling trends.

**Wholesaling**: The wholesale survey for sales compared to a year ago edged lower to -32 in April from -31 in March. Orders compared to a year ago remained at a reading of -41 in April. Sales evaluated for the time of year improved to a reading of -20 in April from -39 in March—a significant step up, but still very weak. The percentile standings for these three categories show sales compared to a year ago at the 8.8 percentile, orders compared to a year ago at the 5.6 percentile, and sales evaluated for the time of year at the 14.8 percentile.

**Wholesale Expectations**: The look-ahead observations, which provide expectations for wholesaling in May, show a similar constellation of readings, with sales compared to a year ago falling to -37 in May from -27 in April and orders compared to a year ago falling to -42 from -38, while sales evaluated for the time of year improved to  16 from  37. That category for wholesale sales improved both in April in real time and in May for expectations; however, it continues to have a very weak percentile standing, at the 17.9 percentile in May, while sales for a year ago have a 6.7 percentile standing and orders for a year ago have a 6.0 percentile standing.

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While some of the global PMI data have improved, these survey data for the U.K. are particularly dour. The war in Ukraine drags on, and there's a new conflict in Iran that has shut the Strait of Hormuz, creating energy problems for much of Europe. More broadly, supply chains have been harmed. In addition, the U.K. is undergoing a bout of political instability, as its Prime Minister is under pressure and a good deal of political uncertainty is being worsened by deteriorating economic performance.

Both the U.K. and the European Monetary Union had been showing some progress on inflation until the Iran war hit. Now, as the oil prices are up so sharply, headline inflation is going to be worse everywhere and there will probably be a bit more attention directed to the core inflation rate. However, the U.K. has had inflation too hot for a while, and it has failed to settle down. At its last meeting, the Bank of England’s Monetary Policy Committee warned that if the war was still ongoing at the next meeting, there would be a risk of a rate hike. So, it would seem that a rate hike is going to be in play unless the economy falls off a cliff first, which, based on the distributive trades data, is also something that could happen. The U.K. economy appears to be on very unsound footing, and what happens next is just about anybody's guess.

United Kingdom

U.K. Retail Sales: Worse Than During Covid

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The onset of the war in Iran appears to have hit the German economy extremely hard as the Ifo survey shows very substantial and broad-based decline across its survey in April. The Ifo survey features readings for five sectors as well as an aggregate reading, and it surveys them for climate, current conditions, and expectations. The decline in the Ifo survey is present for all three concepts and across all five sectors, marking the weakening in April as a highly significant and extremely disturbing development. Only manufacturing in the current conditions survey escapes a month-to-month decline.

**The Ifo sequences**: The **climate** reading fell both overall and across each of the five sectors. **Current conditions** declined for the overall and for four of the five sectors, with manufacturing the sole exception. **Expectations** declined for the overall and for all sectors. Several of the sector declines were for a very substantial magnitude, especially when compared to historic changes in these indexes.

**Monthly changes in readings—severe broad deterioration**
The month-to-month change in the climate reading has weakened more month-to-month 19% of the time. That overall result, however, is boosted by manufacturing where the monthly change has been weaker 35% of the time (on data back to 2011). However, all other sectors have seen climate weaker m/m only 2.3% to 6.3% of the time! The current situation readings weakened, with the headline weakening more m/m 11% of the time. This was boosted by manufacturing, the only sector that improved on the month; its ranking on change was in its 85th percentile—quite good and truly stand-alone good news. The other current changes by sector ranged from construction being weaker 1.7% of the time, to retailing that has been weaker about 30% of the time in terms of m/m changes. Expectation changes were uniformly terrible, with the headline drop weaker only 6.3% of the time and sector change month-to-month weaker between 9% and 1.7% of the time. The monthly weakening was uniform and substantial. I document it with these calculations, but you can also see it on the chart above.

**Climate**: The bottom line is that the all-sector index for climate fell to -20.3 in April from -18 in March, placing it at a 10.5 percentile standing on data since 1993. The sector ranking is the highest for construction with a 42.2 percentile standing and the weakness for services at a 1.1 percentile standing—weaker than the table reading nearly 99% of the time. In terms of percentile standing levels or monthly changes, conditions are closing in on grim.

**Current conditions**: Current conditions saw the all-sector index slip to -5.3 in April from -2.4 in March. The headline ranking stands at a 9.8 percentile mark, making it—like the climate reading—weaker than its current reading only about 10% of the time. The strongest reading under current conditions is for construction which has a 60.6 percentile standing; it is the only ranking in the table above its historic median. Manufacturing, the only sector in the survey that improved month-to-month, has a 22.5 percentile standing, while services record the weakest percentile standing under current conditions, at an 8.4 percentile standing.

**Expectations:** The all-sector index for expectations fell to -25.3 in April from -19.9 in March, placing it at a 6.3 percentile standing. The percentile standings across sectors range from a high of 9.5% for manufacturing to a low of 1.5% for retailing. Up until earlier this year, the Ifo was showing signs of improvement; however, all of that has simply collapsed in the last month. Weakness is across economic concepts and sectors, as documented above. For reference, the table also gives a separate set of rankings on where the various indexes stand since the invasion of Ukraine, since that was another marked event that drove the index, that had been improving after Covid, down to lower levels.  Ranked even on this reduced scale looking at conditions only since the invasion of Ukraine, when conditions have generally been weaker, the current rankings across the Ifo survey remained extremely weak. This is a very disturbing survey for the German economy.

Economy in Brief

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U.S. Leading Economic Indicators Plunge

U.S. Housing Starts & Building Permits Collapse in March

U.S. Housing Starts & Building Permits Collapse in March

U.S. Business Inventories and Sales Decline in February

Coronavirus Closings Plunge Empire State Manufacturing Index to Record Low

TT

KABOOM! The Lockdown Strikes

U.S. Home Builder Sentiment Collapses